Investing

7 Highest-Yielding Dividend Aristocrats May Be Some of the Best 2023 Total Return Picks

In what will be known in the future as the “Pandemic Years,” the easy money and the government’s spoon-fed liquidity made lots of new investors feel like they were genius investors. Those that made big money on meme stocks that were retail-driven short-squeeze winners are now finding out the hard way that when the Federal Reserve turns off the money spigot and interest rates skyrocket to the highest levels in over 15 years, the game becomes a little harder to play.

So what is the best plan for 2023 after a horrible 2022? The Nasdaq was buried in bear market territory and the S&P 500 almost was, closing down 19.4%. While the big increases in the federal funds rate are probably over, it still appears that the Federal Reserve is intent on pushing rates higher to choke off the lower, but still persistent inflation.

The best plan now is to stay in cash, unless passive income is required from investments. Often when income investors look for defensive companies paying big dividends, they are drawn to the Dividend Aristocrats. The 66 companies that made the cut for the 2022 S&P 500 Dividend Aristocrats list (and likely will remain so in 2023) have increased dividends (not just remained the same) for 25 years straight. However, the requirements go even further. The following attributes are also mandatory for membership on the aristocrats list:

  • Companies must be a member of the S&P 500.
  • They must be worth at least $3 billion at the time of each quarterly rebalancing.
  • They must have an average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.

We screened the list looking for the companies that paid the highest dividends. Surprisingly, seven of the dividend leaders also look like very timely ideas to start 2023. All are rated Buy at major Wall Street firms, and they offer investors battered last year solid total return potential, which many on Wall Street feel will be a crucial component for investing success this year. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

The seven companies are in order of the highest yields.

VFC

This proverbial “off-the-radar” idea can be purchased and held forever, as it makes name-brand popular clothing. V.F. Corp. (NYSE: VFC) engages in the design, procurement, marketing and distribution of branded lifestyle apparel, footwear and related products for men, women and children in the Americas, Europe and elsewhere.

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